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Europe

First EU loan of 14.5 billion euros handed to Greece

Text by NEWS WIRES

Latest update : 2010-05-18

Crisis-hit Greece received 14.5 billion euros of a 110 billion-euro EU loan Tuesday, meeting an Athens deadline for the most urgent tranche to help the country address its debt crisis. The agreement was made at a meeting in Brussels Monday.

AFP - Eurozone finance ministers vowed Tuesday to fix the region's finances after expressing concern at the plunging euro, but announced more talks to finalise the massive rescue fund for debt-hit members.

The chairman of the 16-strong eurozone group meanwhile backed controversial plans for Brussels to vet budgets in all 27 European Union countries before they are put to national parliaments.

Luxembourg Prime Minister Jean-Claude Juncker insisted however: "The commission is not going to become the school headmistress for member states' budgetary policies."

Juncker was speaking eight days after the European Union and the International Monetary Fund announced a 750-billion-euro (close to a trillion dollars) rescue plan for heavily indebted members.

Despite the plan, and last week's announcement by Portugal and Spain of their plans to accelerate cuts in public spending in a bid to restore market confidence, the European currency has suffered in recent trading.

On Monday, it hit its lowest level since April 2006 in Tokyo trading, before making a partial recovery. In early trading Tuesday in Tokyo, it remained under pressure buying 1.2335 dollars, up from its low of 1.2234.

Eurozone ministers had welcomed the proposals set out by Spain and Portugal, said Juncker, after the seven hours of talks in Brussels.

"The euro is a credible currency," he said.

But he conceded: "I am not worried by the current exchange but by the speed at which the exchange rate deteriorated."

Juncker also announced that the massive rescue package for the eurozone needed further talks, scheduled for Friday, to settle "technical details", while adding: "Nothing dramatic is under way."

Some countries wanted to be able to go back to their national parliaments to seek approval any time a eurozone country called for funding from the rescue package, he acknowledged.

Finland was one such country, said a diplomatic source, but Germany had also insisted on the need for parliamentary approval during talks with French officials.

The "need to exchange points of view" in elected chambers was "all the more surprising because on May 9 it was said that there was complete agreement on the rescue plan," he told journalists, betraying a degree of frustration.

French Finance Minister Christine Lagarde said: "In the great majority of member states, with the exception of one or two smaller ones... it is not a question of going back to parliament once the mechanism is activated."

But diplomatic sources said Germany and the Netherlands had successfully pushed for a unanimous vote among eurozone countries any time a country called upon the fund's resources.

Juncker defended the plan for EU scrutiny of member states' budgets, an idea that has already received a hostile reception from some countries, including Sweden.

The idea, tabled last week, was "heading in the right direction", he said.

"It's not a question of cutting across the budgetary powers" of nationally elected politicians, he said.

But the proposal is likely to meet resistance from Britain's new Conservative Prime Minister David Cameron.

One of the Conservatives' conditions in the power-sharing agreement struck with the pro-Europe Liberal Democrat party was that any further transfer of powers from Britain to Europe had to be approved by a referendum.

Cameron's finance minister, George Osborne, will come face-to-face with his EU counterparts for the first time in Brussels later on Tuesday morning.

At that meeting, plans to toughen regulation of London's powerful hedge fund industry are already set to be pushed through despite British opposition.

Also on Tuesday, 14.5 billion euros of EU loans agreed for Greece will be paid, meeting an Athens deadline for the most urgent tranche of its 300-billion-euro debt.
 

Date created : 2010-05-18

  • GREECE

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  • EUROZONE

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  • MARKETS

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